Great expectations

All vendors will argue that their Middle East partners are given first-class treatment when it comes to service and support. It’s a fact of channel life that manufacturers like to paint a picture of a highly satisfied partner community getting all the help it could wish for. But on occasions when this illusion is shattered it merely re-opens the argument that the market is still under-resourced.

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By  Andrew Seymour Published  February 21, 2007

All vendors will argue that their Middle East partners are given first-class treatment when it comes to service and support. It’s a fact of channel life that manufacturers like to paint a picture of a highly satisfied partner community getting all the help it could wish for. But on occasions when this illusion is shattered it merely re-opens the argument that the market is still woefully under-resourced.

Heavyweight Saudi distributor AIM —which carries a number of A-brand vendors in its portfolio — confirmed its aspirations to begin working with Fujitsu Siemens again this week. AIM’s partnership with FSC has been stagnant for five months after it stopped all notebook purchases from the vendor last September.

AIM alleges it took that dramatic course of action because FSC was unable to give it the level of support it required to overcome the repercussions of a dramatic slump in the Saudi channel last spring. For those who need reminding, the Kingdom’s IT hardware market suffered a big hit in the first half of last year when the stock market crashe.

The impact of this event would not have been so devastating had it not been for the fact that so many vendors pushed colossal amounts of stock into the channel ahead of Gitex Saudi. Ambitious forecasting, based largely on a buoyant first quarter, merely compounded the problem.

AIM’s beef isn’t FSC’s aggressive sales targets, but that the vendor couldn’t provide the assistance AIM deemed necessary in terms of pricing and margin protection when the IT market bombed. For the record, FSC maintains its separation from AIM came after a ‘common understanding’ and while declining to comment specifically on AIM’s accusations, FSC claims it is satisfied with the service levels it presently provides to the market.

But these details are beside the point. FSC wasn’t the only vendor impacted by last year’s crisis. Other vendors took massive hits, including several of the notebook suppliers that occupy higher positions in the market than FSC. Again, they pushed product into the channel ahead of Gitex Saudi and were then left facing up to a channel stuffed full of inventory when the market crashed.

Yet, sources I’ve spoken to insist the vendors with more comprehensive internal resources inside the country were far swifter at correcting the problems than those who still rely on a more centralised model. FSC, incidentally, is understood to have just a handful of people working inside Saudi.

The wider point here — irrespective of the FSC and AIM situation — is that vendors who can’t demonstrate the support to match their expectations in the region’s emerging markets are frankly playing a dangerous game.

The Middle East remains such a high-growth market that most vendors have been accustomed to achieving high sales growth in the last few years without having to worry about providing anything more than the most basic support functions. As the entire channel matures, there is no doubt that this will have to change or vendors risk creating unwanted resentment among their partners.

It is all well and good having an appetite for these markets, but that must be matched by the ability to provide adequate support measures on the ground.

There is still a huge discrepancy in this region in terms of the vendors that have invested in building a strong local service and support capability in markets outside the UAE and those who haven’t. I am sure we will increasingly come to see just how much of an important differentiator this proves to be, even if it does compromise the vendors’ portrayal of a utopian market.

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